Behind-the-meter storage

The short version

Behind-the-meter battery storage sits on the customer's side of the utility meter and reshapes how the facility appears to the grid. Charge the battery from cheap grid power overnight or from rooftop solar at midday, then discharge during the facility's peak demand hour to reduce the metered peak. The customer pays lower demand charges, captures time-of-use arbitrage on the energy charge, increases self-consumption of any on-site solar, and gains backup resilience — all from the same asset, optimized by a single controller.

Demand charges and peak shaving

Commercial and industrial customers pay a demand charge of $5–$30/kW per month based on their highest 15-minute or hourly demand during the billing period. A facility with 500 kW peak demand at $20/kW pays $10,000/month in demand charges alone. A 100 kW battery discharging during that peak interval reduces metered demand to 400 kW — saving $2,000/month, or $24,000/year, from demand charges only.

Effective peak shaving requires three components: a battery sized to address typical peak excursions (often 10–25% of facility nameplate demand); a controller that uses load forecasting to identify and pre-position for peak intervals; and ratification through actual operational performance — many facilities discover their predicted peaks differ materially from actual peaks once the system is monitored.

Time-of-use arbitrage and solar self-consumption

In jurisdictions with time-of-use (TOU) rates — particularly California, parts of New York, and Massachusetts — peak energy rates can be 2–3× off-peak rates. A battery charged during off-peak windows (often midday in high-solar markets, or overnight elsewhere) and discharged during the peak window captures that spread. Net of round-trip efficiency losses of 10–15%, the arbitrage can be meaningful — particularly stacked on top of demand charge savings.

For facilities with rooftop solar, storage dramatically increases the value of self-consumption under net billing regimes. In California's NEM 3.0 environment, where export credits run roughly 25% of historical retail rates, storing midday solar output for evening self-consumption captures retail value rather than wholesale export value — often the difference between a viable and unviable solar economics.

Incentives and resilience value

The federal ITC applies to standalone behind-the-meter storage at 30% of installed cost under Section 48E, with potential bonus credits stacking to 50%. The One Big Beautiful Bill Act (July 2025) retained the storage ITC essentially intact — including standalone storage and storage co-located at wind or solar sites — even as it terminated the ITC for the wind and solar generation portions. Storage is generally available through end-2033 BOC followed by a three-year phaseout. California's SGIP provides upfront rebates particularly generous for low-income, medically vulnerable, or high-fire-risk customers. Other state programs include New York's market-acceleration incentives, Massachusetts's Clean Peak Standard, and various utility-specific programs in territories with significant peak management needs.

Beyond direct bill savings, BTM storage provides resilience value — with islanding equipment, the system can backup critical loads during grid outages. This value is difficult to quantify on a standard NPV basis but increasingly material for facilities in hurricane-prone areas, California's PSPS zones, and territories with aging grid infrastructure. Combined with on-site solar, storage can extend backup operation indefinitely during daytime hours, providing genuine grid-independent capability for critical operations.